Impax Laboratories ($IPXL) has enough on its plate trying to get its manufacturing facilities in tip-top shape ahead of FDA reconsideration of its Parkinson drug, which was sidelined over the issues. A securities lawsuit tied to those manufacturing setbacks was a distraction it didn't need, and so it has settled the litigation.
Impax reported in an SEC filing Wednesday that it had settled the year-old litigation for $8 million, without admitting any wrongdoing or liability. "The company and other defendants agreed to the settlement to eliminate the uncertainty, distraction, burden and expense of further litigation," the company declared.
The drug company is dealing with enough uncertainty with Rytary. The company reported last week that the FDA, in a procedural move, delayed reconsideration of the drug after Impax made changes to its application tied to its Taiwan manufacturing facility. The changes were made after the company received an FDA Form 483 following a recent inspection. And that Form 483 came after one it received for its Hayward, CA, plant a week earlier.
Impax had shifted much of the production for Rytary to the Taiwan plant after problems arose in Hayward in 2011, leading to a warning letter. But in late July, the FDA issued the Form 483 for the Taiwan plant which included 7 "inspectional observations, two of which are designated as repeat observations," at the end of a two-week inspection.
The lawsuit accused Impax of playing down the extent of the FDA concerns and issuing reassuring statements after getting its warning letter. It said the seriousness of the situation came to light after the FDA did a reinspection of Hayward in March 2013, finding more problems, some of them repeats. This led Impax to say it would have to delay the launch of several key drugs. Of course, the stock took a hit. The suit said, "As a result of this news, Impax's stock dropped $5.20 per share to close at $14.80 per share on March 5, 2013, a one-day decline of 26% on high volume. The stock experienced a large volume of sales, and a 45% decline in value from its class period high."
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